Chadha Sugars Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1773/DEL/2010

• Counselvise Citation: 177320114 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 19-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROHIT GARG
• Assessee Lawyers: SANAT KAPOOR
• Keywords: Wrong claim; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B DELHI BEFORE SMT. DIVA SINGH AND SHRI K.G. BANSAL ITA NO. 1773(DEL)/2010 ASSESSMENT YEAR: 2003-04 CHADHA SUGARS PVT. LTD., ASSISTANT COMMISSIONER OF NOW KNOWN AS WAVES INDUSTRIES VS. INCO ME-TAX, CIRCLE 3(1), PVT. LTD., 60, FRIENDS COLONY,(E), NEW DELHI.. NEW DELHI. PAN: AAACC6691C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANAT KAPOOR, ADVOC ATE RESPONDENT BY : SHRI ROHIT GARG, SR. DR DATE OF HEARIN G: 09.12.2011 DATE OF PRONOU NCEMENT: 23.12.2011. ORDER PER K.G. BANSAL : AM THE FACTS IN BRIEF ARE THAT THE RETURN WAS FILE D ON 27.11.2003 DECLARING LOSS OF RS. 9,41,74,024/-. THIS RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR SHORT) ON 12.03.2004. THEREAFTER, NOTICE U/S 143(2) WAS ISSUED ON 29.11. 2004 FOR THE PURPOSE OF MAKING ASSESSMENT. THE ASSESSMENT WAS MADE ON 28.02.2006 U/S 143(3) OF THE ACT AT A LOSS OF RS. 8,63,28,303/-. TH E QUESTION RELEVANT FOR US, ARISING IN THE ASSESSMENT, IS ABOUT THE DEDUCTIBI LITY OF EXPENDITURE OF RS. 7,80,500/- PAID BY THE ASSESSEE TO REGISTRAR OF COMPANIES FOR RAISING THE ITA NO. 1773(DEL)/2010 2 AUTHORIZED CAPITAL. THE ASSESSEE HAD CLAIMED THE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THE AO HELD THE EXPENDITURE TO BE OF CAPITAL NATURE IN THE LIGHT OF DECISION OF HONBLE SUPREME COU RT IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION VS. CIT, 225 ITR 792 AND BROOKE BOND INDIA LTD. VS. CIT, 225 ITR 798. THUS, THE DEDUCTION OF THIS AMOUNT WAS DENIED. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED BY MENTIONING THAT THE ASSES SEE HAS CONCEALED THE TAXABLE INCOME BY CLAIMING EXCESS EXPENDITURE. THESE PROCEEDINGS WERE COMPLETED ON 28.03.2008 BY LEVYING THE MINIMUM PENALTY OF RS. 2,86,833/-. IT WAS MENTIONED THAT THE ASSESSEE FURN ISHED INACCURATE PARTICULARS OF INCOME AND HENCE IT IS A FIT CAS E FOR IMPOSITION OF PENALTY U/S 271(1)(C). THE LEVY WAS CONFIRMED BY THE CIT(APPEALS) BY RELYING ON THE DECISION IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS LTD., (2008) 306 ITR 277 (S.C.) AND CIT VS. ESCORTS FINANCE LTD., 183 TAXMAN 453 (DEL). THE ASSESSEE HAS C HALLENGED THE LEVY ON THE GROUNDS OF NON-RECORDING OF THE SATISFACTION AND A LSO ON MERITS. IN THIS REGARD, FIVE SUBSTANTIVE GROUNDS HAVE BEEN TAKE N, WHICH ARE DISPOSED OFF ON THE BASIS OF THE SUBMISSIONS MADE BY THE RIVAL PARTIES. ITA NO. 1773(DEL)/2010 3 2. IN RESPECT OF CHALLENGE ON GROUND OF NON-RECOR DING OF SATISFACTION, THE CASE OF THE LD. COUNSEL IS SOMEWHAT DIFFERENT FROM THE GROUND TAKEN IN THE APPEAL. GROUND NO. 2 STATES THAT NO SATISFA CTION HAS BEEN RECORDED PRIOR TO INITIATION OF PROCEEDINGS U/S 271(1)(C ). HENCE, THE NOTICE ISSUED AND THE ORDER PASSED ARE BAD IN LAW AND WI THOUT JURISDICTION. HOWEVER, THE CASE OF THE LD. COUNSEL IS THAT WH ILE THE PENALTY IS INITIATED ON THE GROUND OF CONCEALMENT OF INCOME, THE PENALTY IS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME, THERE FORE, THE CHARGE, ON WHICH PENALTY IS LEVIED, HAS NOT BEEN COMMUNICATED TO THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS. IN THIS CONNECTION, RELIAN CE HAS BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE O F MS. MADHUSHREE GUPTA & ANOTHER VS. UNION OF INDIA & ANOTHER, (20 09) 317 ITR 107. 2.1 IN REPLY, THE LD. SENIOR DR SUBMITTED THAT THE AO RECORDED A CLEAR SATISFACTION IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS CONCEALED THE INCOME BY CLAIMING EXCESS EXPENDITURE, THEREFOR E, PENALTY PROCEEDINGS HAVE BEEN INITIATED SEPARATELY. HIS SUBMISSION IS THAT THE AO HAS NOT ONLY RECORDED THE SATISFACTION BUT ALSO CLEARLY INDIC ATED THE CHARGE THAT EXCESSIVE CLAIM OF EXPENDITURE HAD BEEN MADE. TH ERE MAY BE SOME ERROR IN USING THE WORDS HAS CONCEALED THE TAXABLE INC OME, BUT THAT IS NOT ITA NO. 1773(DEL)/2010 4 MATERIAL AS IT HAS BEEN IMMEDIATELY CLARIFIED THER EAFTER THAT EXCESS EXPENDITURE HAD BEEN CLAIMED. 2.2 WE HAVE CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT DISALLOWANCE OF EXPENDITURE INCURRED FOR INCREASING THE AUTHORIZED CAPITAL WAS DISALLOWED BY THE AO BY FOLLOWING TWO RULINGS OF THE HONBLE SUPREME COURT, WHICH A RE BINDING ON ALL QUASI- JUDICIAL AUTHORITIES AND COURTS IN INDIA. NO FA ULT CAN BE FOUND IN DISALLOWING THE AMOUNT. THE AO HAS ALSO RECORDED SATISFACTION, THEREFORE, THE GROUND TAKEN BY THE ASSESSEE IN THE APPEAL IS INCORRECT WHEN IT STATES THAT NO SATISFACTION HAS BEEN RECORDED. IN THE CASE OF MS. MADHUSHREE GUPTA (SUPRA), THE HONBLE COURT REFERRED TO THE PROVISIONS CONTAINED IN SECTION 271(1)(C) AND CAME TO THE CONCLUSION AT PAGE 128 THAT THE SATISFACTION OF CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OR BOTH SHOULD BE ARRIVED AT DURIN G THE COURSE OF ANY PROCEEDINGS, BUT NOT IN PENALTY PROCEEDINGS. TH E CASE OF THE LD. COUNSEL IS THAT SATISFACTION ABOUT FURNISHING INACCURATE PARTICULARS HAS BEEN RECORDED FOR THE FIRST TIME IN THE PENALTY ORDER, WHICH WAS MISSING IN THE ASSESSMENT ORDER. FURTHER, AT PAGE 143, AFTER REFERRING TO SOME DECIDED CASES, THE HONBLE COURT MENTIONED THAT THE NOTIC E FOR INITIATION OF PENALTY ITA NO. 1773(DEL)/2010 5 MUST BE ISSUED ONLY AFTER ARRIVING AT THE SATIS FACTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THIS CASE, WE HAVE ALREADY COME TO THE CONCLUSION THAT THE SATISFACTION HAS BEEN RECOR DED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ONLY QUESTION IS-WHET HER, THE SATISFACTION IS IN RESPECT OF CONCEALMENT OF INCOME OR FURNISHIN G INACCURATE PARTICULARS OF INCOME? THE AO HAS CLEARLY MENTIONED THAT THE ASSESSEE HAS CLAIMED EXCESSIVE EXPENDITURE OF RS. 7,80,500/- IN RESPECT OF FEES PAID TO REGISTRAR OF COMPANIES FOR RAISING AUTHORIZED CAPITAL. THI S AMOUNTS TO FURNISHING INACCURATE PARTICULARS OF INCOME, THEREFORE, THE WORDS USED HAS CONCEALED THE TAXABLE INCOME ARE INAPPROPRIATE. HOWEVER, THAT DOES NOT MEAN THAT THE CHARGE HAS NOT BEEN CLEARLY STATED IN THE A SSESSMENT ORDER. THERE IS A CLEAR MENTION OF CLAIM OF EXCESS EXPENDITURE, W HICH IS ALSO THE BASIS FOR LEVY OF PENALTY. IN VIEW THEREOF, THE FACTS OF THE CASE OF MS. MADHUSHREE GUPTA (SUPRA) ARE DISTINGUISHABLE. SINCE THE CHA RGE HAS BEEN CLEARLY LAID OUT IN THE ASSESSMENT ORDER, WE ARE NOT ABLE TO PERSUADE OURSELVES TO ACCEPT THE ARGUMENT OF THE LD. COUNSEL THAT THE CHARGE OF INACCURATE PARTICULARS OF INCOME HAS BEEN RAISED FOR THE FIRS T TIME IN THE PENALTY ORDER. THUS, GROUNDS IN THIS REGARD ARE DISMISSED. ITA NO. 1773(DEL)/2010 6 3. COMING TO THE MERITS OF THE CASE, IT IS SUBMITTE D THAT THE ASSESSEE HAD OBTAINED OPINION FROM A COUNSEL, WHICH HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NOS. 47 TO 50. THE QUESTION ANSW ERED EX-PARTE BY RAMAN BAJAJ OF M/S BAJAJ & ARORA, CHARTERED ACCOUNTANTS, IS-WHETHER, EXPENDITURE INCURRED IN THE FORM OF PAYMENT OF FEES TO REGI STRAR OF COMPANIES FOR INCREASING AUTHORIZED CAPITAL SHALL PARTAKE THE CHARACTER OF REVENUE OR CAPITAL EXPENDITURE? IN THE OPINION DATED 26.0 3.2003, THE CASE OF CIT, TAMIL NADU VS. KISENCHAND CHELLARAM (INDIA) PVT. LTD., 130 ITR 385 (T.N); HINDUSTAN MACHINE TOOLS LTD. VS. CIT, KARNA TAKA, 175 ITR 220 (KARNATAKA) AND FEDERAL BANK LTD. VS. CIT, 180 I TR 241 (KER.) HAVE BEEN CONSIDERED. FINALLY, IN THE CONCLUSION, IT I S MENTIONED THAT THE ISSUE IS DEBATABLE, BUT THE CONTROVERSY SEEMS TO HAVE BEEN PUT TO REST BY JUDGMENT IN THE CASE OF FEDERAL BANK LTD. THE AP EX COURT HAD HELD THAT IF TWO VIEWS ARE POSSIBLE, THE ONE FAVOURABLE TO THE ASSESSEE SHOULD BE ADOPTED. THEREFORE, THERE SHOULD BE NO PROBLEM WITH THE ASSESSEE IN CLAIMING THE SAID EXPENDITURE AS REVENUE IN THE FINANCIAL STATEMENTS (EMPHASIS SUPPLIED). IT IS FURTHER SUBMITTED THAT THE TAX-AUDITOR HAS ALSO NOT POINTED OUT THAT THE EXPENDITURE OUGHT TO H AVE BEEN DISALLOWED. IN THIS CONNECTION, REFERENCE HAS BEEN MADE TO ITEM 17 OF THE TAX-AUDIT REPORT IN FORM 3CD, IN WHICH EXPENDITURE OF CAPITAL NATU RE HAS BEEN SHOWN AS ITA NO. 1773(DEL)/2010 7 NIL. ON THE BASIS OF THESE EVIDENCES, IT IS A RGUED THAT SINCE THE ASSESSEE IS NOT AN EXPERT IN THE FIELD OF TAXATION AND THE CLAIM HAS BEEN MADE ON THE BASIS OF AN EXPERT ADVICE, THE LEVY OF PENA LTY IS NOT JUSTIFIED. 3.1 ON THE OTHER HAND, THE LD. DR REFERRED TO THE COMPUTATION OF INCOME, PLACED IN THE PAPER BOOK ON PAGE NOS. 45 AND 46, AND SUBMITTED THAT WHILE THERE IS A MENTION OF DEDUCTION U/S 35D , THERE IS NO MENTION ABOUT THE EXPENDITURE INCURRED BY WAY OF FEES PAID TO REGISTRAR OF COMPANIES. THUS, THE EXPENDITURE WAS DEBITED UN DER THE MISCELLANEOUS HEAD AND NOT SHOWN SEPARATELY. THE EXPENDITURE C OULD NOT HAVE BEEN DETECTED BY NORMAL SCRUTINY AS THE EXPENDITURE WAS CAMOUFLAGE WITH OTHER EXPENSES WITHOUT MAKING ANY MENTION THEREO F IN THE COMPUTATION OF INCOME. THERE IS NO MENTION OF THIS EXPENDITURE SEPARATELY IN THE ANNUAL ACCOUNTS ALSO. THE AUDIT-REPORT ALSO SHOWS CAPIT AL EXPENDITURE AT NIL. ACCORDINGLY, IT IS ARGUED THAT THE ASSESSEE US ED SUBTERFUGE TO CLAIM AN EXPENDITURE WHICH IS CLEARLY AND PRIMA FACIE IN ADMISSIBLE IN VIEW OF TWO DECISIONS OF HONBLE SUPREME COURT RELIED UPON B Y THE AO, WHICH WERE RENDERED PRIOR TO FILING THE RETURN OF INCOME. THI S IS CLEARLY A CASE OF FALSE CLAIM. ITA NO. 1773(DEL)/2010 8 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND S UBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE C LAIMED AN EXPENDITURE OF RS. 7,80,500/-, BEING THE FEES PAID TO REGISTRAR OF COMPANIES FOR RAISING AUTHORIZED CAPITAL. IT IS THE ADMITTED POSITION OF LAW THAT THE EXPENDITURE IS NOT REVENUE IN NATURE AND, THEREFORE, IT IS NOT D EDUCTIBLE IN COMPUTING THE TOTAL INCOME. IT IS ALSO THE ADMITTED FACT THAT TWO DECISIONS OF THE SUPREME COURT, ADVERSE TO THE ASSESSEE, HELD FIE LD WHEN THE RETURN WAS FILED. THIS MEANS THAT THE CLAIM IS PATENTLY DISALLOWABLE. IT IS ALSO A FACT THAT THE CLAIM IS NOT DISCERNIBLE ON THE FACE OF THE RECORD AND THE DETAILS OF EXPENSES HAVE TO BE GONE INTO IN ORDER TO DECIP HER THE CLAIM. THE ASSESSEES EXPLANATION IS THAT IT HAD TAKEN AN EXPERT OPINION FROM M/S BAJAJ & ARORA, WHO OPINED THAT THE EXPENDITURE IS REVENUE IN NATURE. THE ASSESSEE DOES NOT HAVE EXPERTISE IN TAXATION MA TTERS, THEREFORE, RELYING ON THE OPINION, THE CLAIM WAS MADE. IN THIS CONN ECTION, WE MAY FURTHER LOOK INTO THE OPINION FURNISHED BY M/S BAJAJ & ARO RA. THE OPINION IS THAT THERE SHOULD BE NO PROBLEM WITH THE ASSESSEE IN CLAIMING EXPENDITURE AS REVENUE IN THE FINANCIAL STATEMENTS. THUS, THE OPI NION WAS NOT FURNISHED FOR THE PURPOSE OF CLAIMING THE EXPENDITURE AS RE VENUE EXPENDITURE FOR COMPUTING THE TOTAL INCOME BUT FOR ACCOUNTING TH E EXPENDITURE IN FINANCIAL STATEMENTS. AN ACCOUNTANTS VIEW IS NOT REALLY MATERIAL FOR ITA NO. 1773(DEL)/2010 9 DECIDING THE DEDUCTIBILITY OR OTHERWISE OF AN E XPENDITURE. THEREFORE, IT FOLLOWS THAT THE CLAIM, WHICH WAS NOT DISCERNIBLE ON PLAIN READING OF THE ACCOUNTS, WAS SOUGHT TO BE STRENGTHENED ON THE B ASIS OF AN OPINION WHICH WAS MERELY GIVEN FOR PREPARING FINANCIAL STATEME NTS. IN OTHER WORDS, THE ASSESSEE KNEW ABOUT THE PROBLEM AT THE TIME OF FI LING OF RETURN, BUT THE CLAIM WAS STILL MADE IN THE FACE OF TWO DECISIONS OF HONBLE SUPREME COURT. NOT ONLY THIS, THE CLAIM WAS PURSUED EVE N UP TO THE LEVEL OF FIRST APPELLATE AUTHORITY IN GROSS DISREGARD FOR THE D ECISION OF THE SUPREME COURT, WHICH THE ASSESSEE CAME TO KNOW AT LEAS T AFTER RECEIVING THE ASSESSMENT ORDER. THEREFORE, IT CAN BE HELD THAT TH E CLAIM WAS NOT ONLY WRONG BUT ALSO FALSE AND IT WAS PERSISTED WITH FO R SOME TIME. 4.1 THE CASE OF THE LD. COUNSEL IS THAT THE ASS ESSEE IS NOT EXPECTED TO KNOW EVERYTHING UNDER THE INCOME-TAX LAW. THE ISSUE IS COMPLEX. THE ASSESSEE HAD OBTAINED THE OPINION BEFORE MAKING THE CLAIM. THEREFORE, IN VIEW OF VARIOUS DECISIONS, THE PENALTY SHOULD BE SUSTAINED. IN THIS CONNECTION, RELIANCE HAS BEEN PLACED ON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS. STATE OF UTTAR PRADESH & OTHERS, (1979) 118 ITR 326, TO T HE EFFECT THAT THE EXPLANATION FURNISHED BY THE ASSESSEE SHOULD BE T AKEN AS BONA FIDE. THE ITA NO. 1773(DEL)/2010 10 DECISION MAINLY DEALS WITH THE APPLICABILITY OF PROMISSORY ESTOPPEL. THUS, IT WAS RENDERED IN A TOTALLY DIFFERENT CONTEXT. 4.2 FURTHER, RELIANCE HAS BEEN PLACED ON THE D ECISION OF A BENCH OF DELHI TRIBUNAL IN THE CASE OF A.B. MOVIES PVT. LT D. IN ITA NO. 432(DEL)/2009 DATED 29.10.2010. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80-IB, WHICH WAS SUPPORTED BY THE CERTIFICATE OF THE CHARTERED ACCOUNTANT. IT WAS HELD THAT THE ASSESSEE WAS NOT LIABLE TO BE PENALIZED U/S 271(1)(C). THE FACTS OF THIS CASE ARE CLEARLY DISTING UISHABLE. FIRSTLY, THE ACT MAKES IT OBLIGATORY TO OBTAIN A CERTIFICATE FROM CHARTERED ACCOUNTANT FOR CLAIMING DEDUCTION U/S 80-IB. TO THIS EXTENT, T HE CHARTERED ACCOUNTANT STATUTORILY ASSUMES THE ROLE ASSIGNED TO HIM FO R A PARTICULAR PURPOSE. NO SUCH ROLE COULD BE SAID TO HAVE BEEN ASSIGNED TO M /S BAJAJ & ARORA, WHO IN ANY CASE HAD FURNISHED THE OPINION FOR A LIM ITED PURPOSE OF THE ACCOUNTING FOR OF THE EXPENDITURE. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION IN THE CASE OF CIT VS. DEEP TOOLS (P) LT D., 274 ITR 603. IT HAS BEEN HELD THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE MISTAKE OF THE CHARTERED ACCOUNTANT WAS NOT BONA-FIDE OR IT WAS NOT IN ACCORDANCE WITH THE PROVISION CONTAINED IN SECTION 80HHC(4). AS IN THE CASE OF A.B. MOVIES PVT. LTD., THE FACTS OF THIS CASE ARE A LSO DISTINGUISHABLE. RELIANCE ITA NO. 1773(DEL)/2010 11 HAS ALSO BEEN PLACED ON THE DECISION IN THE CAS E OF CIT VS. S. DHANABAL, 309 ITR 268. IN THIS CASE THE CLAIM U/S 80HHE W AS BASED UPON THE CERTIFICATE OF THE CHARTERED ACCOUNTANT, THEREFORE , THE POSITION IS SIMILAR AS IN THE CASE OF A.B. MOVIES PVT. LTD. (SUPRA). 4.3 RELIANCE HAS ALSO BEEN PLACED ON THE DECISIO N IN THE CASE OF BIJLI INVESTMENT (P) LTD. VS. ITO, RENDERED BY SMC BENCH OF DELHI TRIBUNAL, (2007) 13 SOT 725, IN WHICH IT HAS BEEN HELD TH AT THERE MUST BE SOME MATERIAL OR CIRCUMSTANCE LEADING TO A REASONABL E CONCLUSION THAT THE AMOUNT REPRESENTS ASSESSEES INCOME, AND CIRCUMST ANCES MUST SHOW THAT THERE WAS CONSCIOUS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. WE ARE OF THE VIE W THAT THE RATIO OF THIS CASE DOES NOT ADVANCE THE CASE OF THE ASSESSEE. UNDO UBTEDLY, THE AMOUNT COULD NOT BE CLAIMED BY THE ASSESSEE EVEN ON A P RIMA FACIE BASIS. IT HAS BEEN MENTIONED EARLIER THAT THE ASSESSEE CLAIMED AND CONTINUED TO CLAIM THE DEDUCTION UP TO THE LEVEL OF FIRST APPELLATE AUTHORITY IN THE FACE OF TWO ADVERSE DECISIONS OF THE SUPREME COURT. THUS, WH ILE EVEN THE SECOND CONDITION IS SATISFIED IN THIS CASE, BEING A CON SCIOUS CLAIM CONTRARY TO LAW, WE HAVE ALSO TO TAKE INTO ACCOUNT THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS LTD . (SUPRA) THAT MENS REA ITA NO. 1773(DEL)/2010 12 IS NOT THE INGREDIENT OF THE LEVY U/S 271(1)(C) , WHICH HAS TO BE CONSIDERED IN THE LIGHT OF STATUTORY PROVISION. THUS, THE MATERIAL CONSIDERATION IS WHETHER THE ASSESSEES CLAIM WAS BONA FIDE OR NOT . WE ARE OF THE VIEW THAT FACTS AND CIRCUMSTANCES DO NOT LEAD TO A CONCLUSIO N THAT IT WAS BONA- FIDE. 4.4 RELIANCE HAS ALSO BEEN PLACED ON THE DECISIO N IN THE CASE OF CIT VS. SHAYAMA A. BIJAPURKAR IN ITA NO. 842 OF 2 010, RENDERED BY HONBLE DELHI HIGH COURT ON 13.07.2010. IN THIS CASE, THE ASSESSEE HAD CLAIMED THAT CERTAIN TRANSACTIONS LED TO LONG-TE RM CAPITAL GAIN AS ADVISED GIVEN BY THE TAX CONSULTANT. THE HONBLE COURT H ELD THAT THE ASSESSEE WAS UNDER BONA FIDE IMPRESSION THAT TAX ON EMPL OYEES STOCK OPTION PLAN COULD BE A LONG-TERM CAPITAL GAIN. THIS CASE INV OLVED CLASSIFICATION OF INCOME AND ON THE SPECIFIC POINT AN OPINION W AS SOUGHT. AS MENTIONED EARLIER, THE OPINION IN THE CASE AT HAND IS NOT WHETHER THE AMOUNT IS DEDUCTIBLE IN COMPUTING THE TOTAL INCOME BUT THE MODE AND MANNER IN WHICH IT SHOULD BE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. 4.5 FINALLY, RELIANCE HAS ALSO BEEN PLACED ON TH E DECISION IN THE CASE OF AT&T COMMUNICATION SERVICES INDIA (P) LTD. VS. DY. CIT, DECIDED BY DELHI TRIBUNAL IN ITA NO. 2788(DEL)/2006 FOR ASSESSMENT YEAR 2001- ITA NO. 1773(DEL)/2010 13 02 ON 19.03.2010, A COPY OF WHICH HAS BEEN PLACED ON RECORD. IN THIS CASE, THE ASSESSEE HAD CLAIMED 1/3 RD OF THE EXPENDITURE OF RS. 1.00 LAKH PAID TO REGISTRAR OF COMPANIES FOR INCREASING AUT HORIZED CAPITAL. IT IS MENTIONED IN THE ORDER THAT IT IS NO DOUBT TRUE THAT THE CLAIM IS NOT ADMISSIBLE IN THE LIGHT OF DECISION IN THE CASE OF BROOKE BOND INDIA LTD. (SUPRA), BUT THE FACT REMAINS THAT IDENTICAL C LAIM WAS ALLOWED IN THE IMMEDIATELY PRECEDING YEAR, WHICH WOULD HAVE GIVE N BONA FIDE IMPRESSION TO THE ASSESSEE THAT THE CLAIM IS ADM ISSIBLE. THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE BECAUSE REVENUE I TSELF HAD ACCEPTED THE ASSESSEES CLAIM IN THE IMMEDIATELY PRECEDING YEA R LEADING TO IMPRESSION IN ASSESSEES MIND THAT IT IS A DEDUCTIBLE EXPEN DITURE. NO SUCH ALLOWANCE IN THIS CASE WAS GIVEN IN PAST. 5. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE DECISION IN THE CASE OF CIT VS. ESCORTS FINANCE LTD., (2010) 3 20 ITR 44 (DEL). IT IS MENTIONED THAT THE COURT FAILS TO UNDERSTAND AS TO HOW THE CHARTERED ACCOUNTANT, WHO IS SUPPOSED TO BE EXPERT IN TAX LAWS, COULD GIVE SUCH AN OPINION HAVING REGARD TO THE PLAIN LANGUAGE OF SECTION 35D. IT IS NOT THE CASE OF THE ASSESSEE THAT THE RETURN WAS FILED CLAIMING THE AFORESAID DEDUCTION ON THE BASIS OF THE SAID OPINION. ITS CASE WAS THAT BASED UPON ITA NO. 1773(DEL)/2010 14 THE OPINION OF CHARTERED ACCOUNTANT, IT WAS MEN TIONED IN THE PROSPECTUS THAT THE ASSESSEE WOULD BE ENTITLED TO RELIEF U/S 35D OF THE ACT. SINCE A FINANCE COMPANY IS NOT ENTITLED TO THE DEDUCTION EX-FACIE, THUS, IT WAS NOT A WRONG CLAIM BUT A FALSE CLAIM. THIS CASE ALS O SHOWS THAT THE ASSESSEES RELIANCE ON TAX AUDIT REPORT IS OF NO CONSEQUEN CE. THE HONBLE COURT HAS HELD THAT IT IS NOT UNDERSTANDABLE HOW A CH ARTERED ACCOUNTANT COULD GIVE SUCH AN ADVICE. IN THIS CASE, THE TAX-AUDIT OR HAS NOT TENDERED ANY ADVICE BUT FILLED UP RELEVANT COLUMN WITHOUT DUE D ILIGENCE. THE OPINION OF M/S BAJAJ & ARORA WAS NOT IN RESPECT OF THE CLAIM UNDER THE INCOME TAX ACT. THEREFORE, IT CAN BE SAID THAT THE EXPLANA TION TENDERED BY THE ASSESSEE IS NOT BONA-FIDE. IT MAY BE MENTIONED HE RE THAT THE ASSESSEE HAS NOT EVEN SOUGHT EXPLANATION FROM TAX AUDITOR OR M/S BAJAJ & ARORA, WHICH GIVES THE IMPRESSION THAT WHOLE THING IS A SHAM. 5. THE REVENUE HAS ALSO RELIED ON THE DECISION I N THE CASE OF CIT VS. ZOOM COMMUNICATIONS PVT. LTD., (2010) 327 ITR 51 0 (DEL). IN THIS CASE, THE QUESTION WAS REGARDING LEVY OF PENALTY ON FALSE CLAIM OF DEDUCTION OF INCOME-TAX. THE TRIBUNAL GRANTED REL IEF BY MENTIONING THAT THE EXPLANATION WAS BONA-FIDE BECAUSE NO PERSON WOULD CLAIM SUCH A DEDUCTION. HOWEVER, THE HONBLE COURT DID NOT AGREE WITH THE TRIBUNAL. ITA NO. 1773(DEL)/2010 15 IT HAS BEEN MENTIONED THAT THE ISSUE OF LEVY OR OT HERWISE OF THE PENALTY HAS TO BE DECIDED ON THE BASIS OF EXPLANATION ON RECORD. THE EXPLANATION ASSUMED BY THE TRIBUNAL DID NOT EXIST ON RECORD. THE ASSESSEE HAD NOT EXPLAINED WHO HAD COMMITTED THE MISTAKE AND NOT EX PLAINED THE CIRCUMSTANCES UNDER WHICH IT WAS COMMITTED. THERE FORE, THE GENERAL PROPOSITION THAT NO PERSON WOULD CLAIM INCOME-TA X AS DEDUCTION CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE RATIO OF THIS CASE IS APPLICABLE. 6. THE ASSESSEE HAS NOT FURNISHED ANY SATISFACTO RY EXPLANATION AS TO WHY A PRIMA FACIE INADMISSIBLE CLAIM WAS MADE I N THE RETURN, MORE SO WHEN EVEN FOR ACCOUNTING PURPOSE THE OPINION OF M/S BAJAJ & ARORA WAS SOME WHAT TENTATIVE. ACCORDINGLY, IT IS HELD THA T NO SATISFACTORY EXPLANATION HAS BEEN FURNISHED IN RESPECT OF A PA TENTLY FALSE CLAIM AND, THEREFORE, THE ASSESSEE HAS MADE ITSELF LIABLE FOR LEVY OF PENALTY. 7. IN THE RESULT, THE APPEAL IS DISMISSED. SD/- SD/- (DIVA SINGH) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- CHADHA SUGARS PVT. LTD., NEW DELHI. ACIT,M CIRCLE 3(1), NEW DELHI. ITA NO. 1773(DEL)/2010 16 CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.